Blizzard has had a few movie contests in the past and the submissions just keep getting better and better. One of the winners from the last movie contest--"Return"--is just spectactular.
XFire is sponsoring the current movie contest which runs from December 14, 2005 to January 21, 2006. Movies should be in one of three categories: Dance, Comedy, or Drama. Five prizes, such as Xbox 360 Premium game consoles, XFX GeForce 7800 GTX video cards (PCI-Express), and Sound Blaster X-Fi Platinum sound cards, will be awarded for each of the three categories listed above. In addition, 10 prizes will be awarded for special categories, including: Best Picture, Best Dialog, Best Editing, and Best Music.
I'm not an expert movie-maker, but I can offer at least a little bit of advice. The first thing you'll want is a good screencasting program--a program for capturing your gameplay. For the Mac, the best screencasting software on the market is Snapz Pro, from Ambrosia. For the PC, there are several options, but a lot of people use Camtasia or Windows Media Encoder (and, apparently, fraps, I'm learning).
There are some freeware and opensource options as well: CamStudio for PC and ScreenRecord for Mac/PC. This wikipedia page has many more options listed as well as an overview of screencasting.
I use a simple $20 Logitech desktop microphone (and headphones) for gaming. I generally use Skype for team audio with my friends, though I tend to solo more than I group, so haven't broadened out into using Teamspeak or Ventrilo yet. The Logitech microphone would be more than acceptable for recording audio or voiceovers.
Once you've recorded your video, you'll have to edit and piece it together. Both iMovie and Windows Movie Maker are good entry-level editing programs that beginners should be able to use for splicing their movie together. Quicktime Pro for both Mac and Windows ($30 from Apple) is also very helpful for cutting up different screen grabs (though it won't edit WMV files). I'm really not a heavy PC user, so I'm can't offer any suggestions on a WMV editor (outside MovieMaker). I personally detest WMV as a file format, but I guess we all work with what we have. Perhaps some readers know some good low-cost or free WMV editors for Windows.
I've been tossing around in the back of my mind an idea for a WoW movie but am not sure I'll have the time to get it done for this contest. Guess we'll see.